According to government estimates, the Great Recession has caused every individual American citizen to lose $70,000 of potential income. If you’re wondering how you could have possibly lost $70,000 without noticing it, stay tuned.
In 2007, the American economy was bustling. Houses were selling like hotcakes, which meant great business for construction companies and mortgage lenders.
The American gross domestic product (GDP) was high and was expected to get higher. This meant that American companies were selling plenty of products and services, so much so that they were paying employees more and hiring more.
What Went Wrong
In 2008, a housing bubble burst. Loan companies were giving people loans that they couldn’t afford and people were buying homes that were beyond their means. As a result, homeowners began to default on their loans, and banks started to lose lots and lots of money.
Every sector of the economy is closely connected. The housing and banking crisis caused the stock market to take a nose dive. In an attempt to recover, companies started to lay off workers and even shut down operations. For the next several years, unemployment rose steadily and wages remained stagnant.
Where Do I Fit Into The Picture?
The entire economy is represented in the GDP. Since the economy suffered, the GDP didn’t reach the levels that were predicted back in 2007. If the economy hadn’t tanked, it is predicted that the average American would have made $70,000 more in income over their lifetime.
As interesting as this may be, there’s no use in crying over the dollars you could have earned. On the bright side, the economy is on the upswing, and unemployment rates are at a historic low. Take advantage of the opportunities that become available as the economy continues to recover.